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Tuesday, May 29, 2018

All About The New Careshield Life (Enhanced Eldershield)

The Ministry of Health just announced last Sunday that there will be another compulsory healthcare scheme which all Singaporeans and PR from the age of 30 to 40 will be automatically enrolled in starting from 2020. In future, everyone who reach 30 years old will be compulsory enrolled in this scheme as well.

Currently, all Singaporeans and PR are also insured under the Medishield life scheme which covers for some basic hospitalisation bills. This is also a compulsory scheme.

What is Careshield life all about?

Careshield life is renamed from Eldershield and is an enhanced version of it. Careshield life will provide monthly income for those who become severely disabled and cannot perform 3 out of the 6 daily living activities.

It will be compulsory for those age 30 to 40 in year 2020 and also future cohorts of those who turn 30 years old. This means that it is compulsory for everyone who is born on or after 1980. For those born in 1979 or earlier, you can still remain on your current Eldershield or opt in to the new Careshield life if you are not disabled. It is reported that this can be done from 2021 onwards.

The best news for this Careshield life is for those who are born on or after 1980 and have disabilities currently, they will still be auto enrolled in this scheme and get the payout immediately. They just have to pay a 1 year premium and get the monthly payout of $600 for the rest of their lives. This will lessen the burden of the caregivers who are taking care of these young persons who are mostly their parents.

How much premiums do I have to pay?

One question we will all have is how much do we have to pay for this? This is definitely another expense which is in a way forced even if we don't want to pay for it. Fortunately, this can be paid using our Medisave, similar to the premiums we pay for our Medishield life.

Premiums to be paid by each individual at different age will be different. Males and Females will pay different premiums also with females paying higher premiums as statistics shows that women live longer than men. The premiums payable is expected to go up by 2% for the first 5 years and continue to go up as needed. There will be a council set up to review the premiums thereafter.

A 30 year old male will have to pay premiums of $206/year starting from 2020. If you are age 40 in 2020, the premiums payable will be $295/year. The premiums will increase by 2% every year for 5 years so a 30 year old male in year 2020 will be paying premiums of $223/year in 2025. For a 40 year old male in 2020, the premiums would go up to $320/year in 2025. For females, the premiums would be higher but i do not have the exact information on it yet. The premiums will be paid until age 67 but coverage will still continue for life.

Indicative premiums table before any subsidies for males:

Age upon scheme launch

Year 1

Year 2

Year 3

Year 4

Year 5

30

206

210

214

218

223

35

244

248

253

259

264

40

295

301

307

313

320

All in all, the total premiums paid will be around $10,000 or more for 37 years. The thing I do not like about the increasing premiums is that there is no certainty of how much premiums I have to pay say 20 years from now. Don't forget we still need to pay for Medishield life premiums and adding up this Careshield life, it can be quite significant in the future and most of us would not have much left in our Medisave account.

The premiums for Careshield life as compared to Eldershield definitely increased and without certainty also. For the current Eldershield, a male person at age 41 only needs to pay a fixed premium of $295/year up to age 65 years old and still get the same $600 lifetime payout coverage. For Careshield life it is $295/year at age 40 with increased premiums every year. Fortunately, there is permanent means test subsidies of up to 30% for the lower to middle income Singapore residents. There is also transitional subsidies of up to $250 for the first 5 years for all future cohorts of Singapore Citizens.
Permanent Means-tested Subsidies for Singapore Residents:

Monthly Per Capita Household Income (PCHI)

Monthly PCHI $1,100 or less

Monthly PCHI $1,101 - $1,800

Monthly PCHI $1,801 - $2,6002

Subsidy rates for Singapore Citizens

30%

25%

20%

The good thing is there is increased coverage also so we might be looking at around $1200/month payout in our 60s. This brings me to my next point on how much payout will we receive in the event of disability?

How much payout will I receive in the event of disability?

In the event if a person becomes severely disabled and cannot perform 3 out of 6 daily living activities, he or she will receive $600 per month from 2020. This payout is expected to increase 2% for the next 5 years. So for example if a person is enrolled into the scheme in 2020 and becomes severely disabled in 2025, he or she should get about $660 per month for their whole life.

I think this is fair since the premiums are increasing also. The plan is to have a payout of $1200/month at age 67 for those who are age 30 in year 2020.

Estimated Monthly Payouts for CareShield Life:

Year from launch of CareShield Life

CareShield Life Monthly Payouts

2020

$600

2021

$612

2022

$624

2023

$637

2024

$649

2025

$662

Why make it compulsory?

I think many people will wonder why does this scheme have to be compulsory? Another thing which will be on most people's mind will be that I don't need this disability coverage at age 30 since I am still young.

The politically correct answer which the government had gave is that they want to create an inclusive society where everyone chip in a bit to take care of one another. While this sounds good, I think it is human nature to ask what is in it for me? I've already saw many feedback and from conversations with my friends, most of us would think disability won't really hit us at least for now. Who will want to be disabled at a young age anyway? Its not just about money but also not being able to have the quality of life and do what we like if we do get disabled at a young age.

It has always been the government's way to risk pool everyone together. The CPF life works in this way too where the younger people contribute to the CPF pool of funds to support the payout of older people. The fund is always invested to generate interest income to support those who are drawing down from it. Medishield life was implemented also to cover even those with pre-existing illness.

For this new Careshield life, those who have pre-existing disabilities are also covered but only for those born on or after 1980. This means that for those who have pre-existing disabilities but are born in 1979 or earlier and do not have Eldershield, they will not be included in this scheme at all. I found out from MOH that they did consider covering everyone with pre-existing disabilities but the premiums will be too high for most to afford so this plan was put aside. However, MOH did say that they are also concurrently reviewing the other long term healthcare schemes in order to support this group of people who are left behind. It may take some time for more information to be available.

I do not have the statistics for disability trends in Singapore but from MOH's data, it is 1 in 2 healthySingaporeans aged 65 could become severely disabled in their lifetime. How true this is, is anybody's guess. What I do know is that if we really do have family member's who become disabled, the financial strain can be quite difficult to cope coupled with emotional stress. I have seen this happen to a few of my relatives due to accident or illnesses. It is more common than we think. This Careshield life is the first step to provide support in the event if really disability happens.

For more information on Careshield life, you can refer to MOH's website here.

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